West-Osteuropäische Warenaustausch Aktiengesellschaft

West-Osteuropäische Warenaustausch Aktiengesellschaft (Wostwag) was a German-Soviet trading company based in Berlin. Established in the early 1920s, it conducted commercial trade between Germany and the Soviet Union and later developed operations in Asia. The company was also used as a cover organisation by Soviet military intelligence and became an important commercial channel for Soviet arms exports to Asia after 1927.

History

Establishment and commercial activities

British intelligence records date Wostwag's establishment in Berlin to November 1922, while historian David R. Stone dates the beginning of its commercial operations to 1923.

Wostwag was a German-Soviet trading company operating with Soviet permission. It functioned as a clearing house for imports and exports, with its headquarters in Berlin and a branch in Hamburg. The company had representatives in the Soviet Union. Its exports included Soviet agricultural products and raw materials such as eggs, meat, feathers and down, oil cake, furs, and metals and ores, while its imports included chemicals, metal powders, and medicines.

The company's commercial structure was closely connected to Soviet state interests. A representative of the People's Commissariat for Foreign Trade worked within Wostwag, while half of its profits were assigned to Soviet interests. Stone describes this arrangement as allowing the Soviet government to participate in foreign trade while retaining the formal structure of a commercial company.

Soviet military intelligence

Wostwag also served as a commercial cover organisation for Soviet military intelligence. A CIA study says that the company was established by the Fourth Department of the Red Army General Staff (known as 'GRU') and that its intelligence activities continued alongside genuine commercial trading. The same study point to two brothers, junior officers of the Fourth Department, as being in charge of the intelligence side of the organisation. Soviet personnel were withdrawn around 1925–26 after German police awareness of the organisation became a concern, while the commercial organisation continued to operate.

British intelligence records associate Wostwag with Aaron and Abraham Ehrenlieb, who were known in Germany as Sigmund and Antek Jankowski.

The company is also discussed by Matthias Uhl in his book about the history of Soviet military intelligence, GRU: Die unbekannte Geschichte des sowjetisch-russischen Militärgeheimdienstes von 1918 bis heute. Uhl discusses Wostwag in the section Die 1920er-Jahre: Wostwag, KPD und andere als Beschaffer, which deals with organisations used by Soviet military intelligence for procurement during the 1920s.

Arms exports

In April 1927, the Politburo decided that Soviet arms exports would be conducted through Wostwag. The company was authorised to conduct trade in Asia and to extend trade credits, while transactions were to be carried out in Wostwag's name rather than in the name of the Soviet government. Wostwag could sell weapons below cost for political purposes. Stone states that approximately three-quarters of the resulting losses were absorbed by Wostwag's own operations, with the remainder covered by a special export fund. China was the most important Asian market for Soviet arms. In 1928, responsibility for arms sales to eastern countries was transferred further from the Red Army towards Soviet economic institutions, while Wostwag continued to be used for arms sales.

Activities in Asia

During the 1920s and 1930s, Wostwag was connected to a network of commercial operations in Mongolia and China, and to branches or associated companies in Urga, Kalgan, Tientsin and other places in the Far East. British records describe the movement of goods through associated companies and purchases of aircraft and other equipment during the late 1930s as part of an effort to combine normal commodity trading with procurement activities for Soviet interests. As Wostwag was also involved in the purchase of commercial vehicles from Daimler-Benz during the interwar period, a discussion of the company's activities is found in Marc Cyrkel-Maier's study of the Daimler-Benz commercial-vehicle plant in Gaggenau.

Post-war British investigations examined Wostwag together with associated companies and organisations in Europe, North America, and East Asia, with some of these organisations treated as successors or affiliates within the wider network.

Gareth Jones and Adam Purpiss

In 1935, British journalist Gareth Jones travelled through northern China and Inner Mongolia. Margaret Siriol Colley's biography of Jones describes his contacts during the journey, including people connected with Wostwag, such as Adam Purpiss. Later British investigations examined Purpiss' role within an international network of trading organisations and its connections with other companies.

Later years

Wostwag continued to operate during the 1930s, with branches and associated companies operating under different names in Europe, North America, and East Asia. German-Soviet trading activities ended in the late 1930s. The Berlin company changed its name in December 1938, after which the Wostwag designation was subsequently replaced in international banking communications.

Further reading

  • Stone, David R. (2013). "Soviet Arms Exports in the 1920s". Journal of Contemporary History. 48 (1): 57–77. doi:10.1177/0022009412461820.
  • Uhl, Matthias (2024). GRU: Die unbekannte Geschichte des sowjetisch-russischen Militärgeheimdienstes von 1918 bis heute. Verlag Herder. ISBN 978-3-534-61012-9.
  • Cyrkel-Maier, Marc (2011). Bei Daimler-Benz in Gaggenau: das Nutzfahrzeugwerk in den Jahren 1926–1945: eine wirtschaftsgeschichtliche Studie. Marburg: Tectum. pp. 205–209. ISBN 978-3-8288-2640-3.
  • Colley, Margaret Siriol (2005). Gareth Jones: More Than a Grain of Truth. Newark: Seren. pp. 22–23.